Keating Five scandal still dogs McCain, 25 years later

U.S. Sen. John McCain, shown here with his attorney John Dowd on Nov. 20, 1990, during a Senate Ethics Committee hearing, was determined to have shown "poor judgment" in meeting with federal regulators on behalf of financier Charles H Keating Jr., who died March 31, 2014, at age 90.(Photo: Republic file photo)

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The death last week of disgraced financier and developer Charles H Keating Jr. brought new attention to a major scandal that 25 years ago threatened to halt U.S. Sen. John McCain's political ascent.

But despite the recent revival of interest in the group of senators known as the "Keating Five," McCain, R-Ariz., was able to put the political liability behind him years ago and has little to fear from the scandal if he chooses to seek a sixth Senate term in 2016, a veteran Arizona political scientist said.

"It's ancient history," said Bruce Merrill, an Arizona State University professor emeritus and longtime political pollster. "It's amazing he survived that, and I guess one could argue that his political skills brought him through that. But the Keating era, the whole savings-and-loan era, that's really history."

Details of the distant scandal are hazy even to many longtime Arizonans. And given the state's rapid growth, many today don't even remember the public outcry, Merrill said. But it will never completely go away.

The five U.S. senators were accused of trying to pressure federal thrift regulators to back off their political benefactor Keating, whose Lincoln Savings & Loan would collapse during the savings-and-loan crisis of the late 1980s at a cost of $3.4 billion to taxpayers. At the time, Keating was an influential and larger-than-life business figure in Arizona and he generously contributed campaign cash to his favorite politicians.

McCain is the only member of the "Keating Five" who is still serving on Capitol Hill. The other four retired in 1990s: U.S. Sens. Alan Cranston, D-Calif.; Dennis DeConcini, D-Ariz.; John Glenn, D-Ohio; and Donald Riegle, D-Mich.

Cranston, who received the most severe rebuke from the Senate Ethics Committee, died in 2000. McCain was deemed to have demonstrated "poor judgment" in meeting with the regulators -- considered a mild reprimand -- while DeConcini's "aggressive conduct" was deemed "inappropriate." McCain had taken another public blow when The Arizona Republic in 1989 reported that McCain and his family had vacationed at Keating's Bahamas retreat and that his wife and father-in-law in 1986 had invested nearly $360,000 in a Keating shopping-center development.

Keating, who died Monday, March 31, at age 90, was tried for fraud and eventually served time in prison.

McCain won re-election in 1992 while the "Keating Five" scandal was still a fresh memory in the minds of voters and in 2008 became the Republican Party's presidential nominee. DeConcini, then Arizona's senior senator, did not run again in 1994.

In his 2002 book "Worth the Fighting For," McCain wrote that thinking about the "Keating Five experience" still made him "wince" even years later and that the memory provoked "a vague but real feeling that I had lost something very important" in pursuit of "gratifying ambitions, my own and others'."

"I have carefully avoided situations that might even tangentially be construed as a less than proper use of my office," McCain and co-author Mark Salter wrote of the lessons he learned. "I have refrained from intervening with regulators or supporting legislation or advocating anything for any purpose that doesn't serve an obvious public interest and that isn't in accord with my general governing philosophy."